Macy's Ramps Up Online Operations

The venerable retailer has been doing some shopping of its own as Internet sales take off.

Macy’s may be famous for department stores, but the big retailer knows that online sales are critical, too.

IT research firm Forrester Research predicts online retail in the U.S. will see double-digit growth over the next five years, from $155 billion in 2009 to nearly $249 billion by 2014. By that time, Web shopping will account for 8 percent of total retail sales, the firm says, and 53 percent of total retail sales in the United States will be influenced by e-commerce as consumers increasingly use the Internet to research products before buying them.

With so much at stake, retailers need to make sure their online sales and marketing operations are efficient, reliable and easy to use—or they risk losing customers to competitors.

Macy’s, which has more than 800 store locations in 45 states and a growing online business, relies on several technologies to ensure that its Web-based operations are running as smoothly as possible.

The company’s e-commerce business has become increasingly important—and continues to expand. In January, Macy’s announced it was adding about 725 new positions over the next two years to support the growth of its Websites. The company says its fast-growing online businesses are being fueled by an “omnichannel strategy” that allows customers to shop seamlessly in stores, online and via mobile devices.

In total, the company expects to add nearly 3,500 full-time, part-time and seasonal holiday associates in the next two years, related to the growth of its online businesses. This includes a new online fulfillment center to be built near Martinsburg, W.V., and the expansion of a fulfillment center near Portland, Tenn.

In the first 10 months of fiscal 2010, online sales at Macy's were up by about 29 percent compared with the same period of 2009. This follows growth of about 20 percent in fiscal 2009 and 29 percent in fiscal 2008.

Monitoring and Analysis

One of the key applications the New York-based company is using to support e-commerce is data monitoring and analysis software from Splunk. The software enables the retailer to monitor, report and analyze live streaming data coming in from the Web, as well as terabytes of historical data.

The software, which Macy’s e-commerce group began using in 2008, allows the company to proactively identify patterns that used to bring its sites down or take hours to find and fix, says Patrick McCaffery, director of e-commerce project delivery at Macy's. Since deploying the software three years ago, Macy’s e-commerce group, which oversees Websites such as Macys.com and Bloomingdales.com, hasn’t experienced any major site outages.

McCaffery says the technology has helped Macy’s avoid potentially damaging online failures. For example, late in 2010, the software quickly alerted technicians to a log file message they had never seen before and that McCaffery says would have been catastrophic to online operations if not addressed.

“Within 30 minutes, the support teams were able to understand how to react” to the message, McCaffery says. Prior to implementing the software, Macy’s relied on a manual process of examining log files to find correlations between online events and to determine the cause of a specific problem.

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